UK unemployment falls to 4.9% as pay growth drops to lowest in five years
UK unemployment fell to 4.9% as pay growth dropped to its lowest in five years, latest figures have shown.
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The Office for National Statistics (ONS) said the rate of UK unemployment dropped sharply to 4.9% in the three months to February, down from 5.2% in the three months to January.
Most economists had expected the jobless rate to remain unchanged.
The ONS said the fall was driven by a rise in inactivity, especially among students, which rose 70,000 in the quarter.
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The figures also showed wage growth dropped further, to 3.6% in the three months to February, down from 3.8% in the previous three months.
Earnings are still outstripping inflation, rising by 0.4% with the Consumer Prices Index (CPI) taken into account, but this is the lowest real growth for more than two-and-a-half years.
Vacancies also plunged by 29,000 to 711,000 in the three months March – now the lowest level since April 2021.
Liz McKeown, ONS director of economic statistics, said: “Alongside falling unemployment, the number of people not actively seeking work increased, with data suggesting fewer students seeking work alongside their studies.“Regular wage growth has slowed further with growth at its lowest rate in over five years.”
Youth unemployment stood at 15.8% for 16 to 24-year-olds in the three months to February, down from 15.9% in the previous quarter.
While the jobless rate fell, the ONS cautioned the figures should be treated with caution given an overhaul to the way the figures are collected.
More timely data estimated the number of workers on UK payrolls dropped 11,000 month-on-month in March to 30.3 million, though this is subject to revision.
This follows a revised 6,000 drop during February, against the 20,000 increase previously estimated.
The data comes amid fears of a spike in unemployment as the Iran war takes its toll on the UK economy, with the Item Club forecasting the jobless rate will surge to 5.8% by the middle of 2027, with almost 250,000 more people without a job.
Work and Pensions Secretary Pat McFadden said: “We cannot escape the effects of the war in the Middle East which are likely to feed through to prices and employment in the coming months.
“We will do everything we can to support the country through this period.”